This issue is absurd. I can add that the iTunes import on the new iPad is 1936*1288.

It should be 1536 on the sort edge (and 2048 or 2304 on the long edge for 4:3 or 3:2). The standard iTunes+Photos path was designed to be little more than a glorified LCD picture frame and not a photo management system. The emphasis was on saving space. (No nested galleries bothers me more.)

I've found the "best" method to getting Canon 40d 10mpx high resolution files onto the tablet is Gmail.

The camera connection kit works well. Or some of the photo transfer apps that use http or ftp.

I am shocked that this hasn't been pointed out by all the reviews. [...] I don't understand the limitation as tools like I photo can edit the full file up to 19mpx.

For most users it does not matter (see glorified picture frame). For photographers there are workarounds which are discussed in more specific reviews.

Dealing with photos (as photographers want to use it) is a problem for iOS. It's designed around applications having private data stores with only limited sharing between applications (e.g. you can only save changes to the Camera Roll or an app-specific data area.) This is so intrinsic to iOS that it may never change. But the hardware and rest of the user space is good enough that many are willing to put up with it - enough so that there is a viable developer base.